TDS on sale of property not reflecting

When a jointly owned property is sold, the capital gains and the associated TDS credit must be reported by each co-owner in proportion to their ownership share, as per their respective Income Tax Returns (ITR). Even if the TDS is currently reflecting only in the PAN of one co-owner in Form 26AS, you should not report the entire transaction and the entire TDS credit in one person's return if you are not the sole owner.

Here is how you should handle this situation to ensure compliance:

1. Report Income According to Ownership Share

Capital gains must be split between the co-owners based on their actual ownership percentage (e.g., 1:1 ratio means 50% each). Each owner must report their respective share of the sale consideration and the resulting capital gains in their own ITR.

2. Claiming TDS Credit

• Proportional Credit: Each co-owner is entitled to claim credit for the TDS deducted on the property in proportion to their share of the income (ownership share).

• The Mismatch: Since Form 26AS reflects the full TDS under only one PAN, the Income Tax Department's system might initially flag a mismatch if one person claims 100% and the other claims 0%, or vice versa.

• Reconciling: When filing your return, you can claim your rightful share of the TDS. It is advisable to keep documentation (like the sale deed, bank statements showing payment to each owner, and a copy of the Form 16B/26QB) ready as proof of the joint ownership and the split of consideration.

3. Practical Steps

• Check Form 26QB/16B: The buyer of the property is responsible for filing Form 26QB. If the buyer has failed to mention both PANs in the form, it is the primary reason for the mismatch.

• Documentation: Maintain a clear record of the agreement between the co-owners regarding the property sale and the division of proceeds.

• Communication with the Tax Department: If you receive an automated notice regarding a TDS mismatch, you can respond by providing the details of the joint ownership, the sale deed, and the explanation that the TDS is being claimed proportionally as per the ownership share.

Summary: You should not report the full amount in one return. Both co-owners should report their respective share of the capital gains. Each owner should claim their share of the TDS (e.g., 50% each in a 1:1 ownership) in their ITR, even if the total TDS is currently reflecting in only one PAN. Keep your sale deed and ownership documents handy to justify the split if questioned by the tax authorities.